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Life Health > Health Insurance > Your Practice

NAIC Panels Push Projects Forward

By Jim Connolly

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Members of a key National Association of Insurance Commissioners committee took the time Wednesday to classify 2 initiatives as model law projects and 2 as guideline projects.

The NAIC’s Health Insurance and Managed Care Committee voted to assign:

- Guideline status to proposed revisions to the Prepaid Limited Health Service Organization Model Act,

- Guideline status to the draft of a new appendix for the Reporting Requirements for Licensees Seeking to do Business with Certain Unauthorized Multiple Employer Welfare Arrangements Model Regulation.

- Model law status to the Uniform Health Carrier External Review Act, which is being developed by the Regulatory Framework Task Force.

- Model law status to proposed revisions to Section 9 of the NAIC’s Long Term Care Insurance Model Act, which deals with producer licensing. The Senior Issues Task Force is working on technical changes to the section.

The health insurance committee at the NAIC, Kansas City, Mo., made the classification decisions because the NAIC recently decided to require committees to get approval from the NAIC’s executive committee before treating projects as model law or model regulation projects.

The new classification system is “a truth in labeling” effort that will require regulators to distinguish between projects that they hope to move as models and projects that they hope to advance as guidance, according to Joel Ario, Oregon insurance administrator and chairman of the NAIC’s health insurance committee.

In some cases, guidelines could have the same content as model laws, Ario says.

The NAIC’s health insurance committee approved the 2 guideline projects at the NAIC’s spring meeting in New York. Those measures now will go before the NAIC’s executive committee and the plenary – a body that includes all NAIC voting membership – at the NAIC’s summer meeting in San Francisco.

The executive committee could decide June 3 whether to approve the health panel’s requests to classify the external review project and the LTC model revision project as model law projects, officials say.

In other NAIC Committee news:

- Members of the NAIC’s Life Insurance and Annuities Committee have agreed to ask for model law status for proposed revisions to the NAIC’s Viatical Settlements Model Act.

- Members of the NAIC’s Hybrid Risk-Based Capital Working Group heard an update from Nancy Bennett, a representative from the American Academy of Actuaries, Washington, on a hybrid securities project.

Insurers and securities firms have clashed with the NAIC’s Securities Valuation Office about the best way to gauge the riskiness of the securities, which share some of the features of stock and some of the features of debt securities.

Regulators have asked the AAA to develop a hybrid securities report in an effort to start with a “clean slate.”

The AAA hopes to have a full report ready by mid-summer, in time for the NAIC’s fall meeting, Bennett said.

The AAA report team believes “hybrids are closer in structure and risk to preferred securities than to true debt,” Bennett said.

Bennett said the following issues still need attention:

- Whether surplus notes are a hybrid investment.

- What types of experience studies would be necessary to provide necessary data to back a position.

- Whether extension risk should be part of C-3 reserving and capital requirements.

C-3 risk is risk related to changes in interest rates.

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